MESSAGE FROM THE PRESIDENT
HEALTH INSURANCE UTILIZATION IMPACT ON PREMIUMS-MY OPINION
Many people do not understand the impact of their health insurance benefit utilization on the escalating cost of insurance. While the majority of policies in Western New York are community rated, utilization continues to have an Impact overall on premium rates. Very simplistically premiums paid go into one bucket and claims are paid from another bucket. If claims exceed premium revenues, rates go up and benefits are diluted. Certainly, specific formulas are utilized by the carriers and the state to justify increases but cost vs. utilization is the prime consideration. However, subscribers who continue to absorb rate increases year after year and also are dealing with higher deductibles and contributions, feel that they want to get their money's worth so they fail to consider the hard costs relative to the products and services they request.
An example of suspect choice of service would be twisting your ankle and requesting an MRI vs. an x-ray. An MRI can cost $5000 while an x-ray in the hundreds. Why not start with the x-ray and only get an MRI if medically necessary. While it might not cost you anymore out of pocket, the carrier pays the difference. Multiply the cost of those unnecessary MRI's by thousands of subscribers and our premiums go up. Another example is generic vs. name brand drugs and the cost differential. Pharmacy representatives supply physician practices with name brand samples that are dispensed to the patients. The patient thinks it is great that their Dr. is providing free medication until the samples run out and they must refill them. The name brand can cost many hundreds of dollars more than the generic equivalent. In the aggregate these costs are passed along to the consumer through a combination of higher co-pays and significantly increased premiums.
At the end of the day, we all deserve quality health care. Our current delivery system of health care services is not sustainable and we are quickly reaching the tipping point where health care premiums are impacting middle income family's ability to afford premiums and maintain their current lifestyle. One way to level set this trend is to consider the cost of treatments vs. outcomes and recognize the impact they can have on your health insurance premiums in the future.
Next month I will discuss wellness programs and how they also have an impact on health care costs and what we can do to improve our personal well being and control escalating costs.